Kinderstart.Com, LLC v. Google, Inc.

Filing 49

MOTION to Dismiss Defendant Google's Motion to Dismiss Plaintiff's Second Amended Complaint filed by Google, Inc.. Motion Hearing set for 10/27/2006 09:00 AM in Courtroom 3, 5th Floor, San Jose. (Attachments: # 1 Proposed Order)(Kramer, David) (Filed on 9/22/2006)

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Case 5:06-cv-02057-JF Document 49 Filed 09/22/2006 Page 1 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DAVID H. KRAMER, State Bar No. 168452 COLLEEN BAL, State Bar No. 167637 LISA A. DAVIS, State Bar No. 179854 BART E. VOLKMER, State Bar No. 223732 WILSON SONSINI GOODRICH & ROSATI Professional Corporation 650 Page Mill Road Palo Alto, CA 94304-1050 Telephone: (650) 493-9300 Facsimile: (650) 565-5100 DKramer@wsgr.com JONATHAN M. JACOBSON, N.Y. State Bar No. 1350495 WILSON SONSINI GOODRICH & ROSATI Professional Corporation 12 East 49th Street, 30th Floor New York, NY 10017-8203 Telephone: (212) 999-5800 Facsimile: (212) 999-5899 JJacobson@wsgr.com Attorneys for Defendant Google, Inc. UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION KINDERSTART.COM, LLC, a California limited liability company, on behalf of itself and all others similarly situated, Plaintiffs, v. GOOGLE, Inc., a Delaware corporation, Defendant. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) CASE NO.: C 06-2057 JF (RS) DEFENDANT GOOGLE INC.'S MOTION TO DISMISS PLAINTIFF'S SECOND AMENDED COMPLAINT Before: Date: Time: Courtroom: Hon. Jeremy Fogel October 27, 2006 9:00 a.m. 3 GOOGLE'S MOTION TO DISMISS SAC CASE NO. C 06-2057 JF (RS) 2955747_2.DOC Case 5:06-cv-02057-JF Document 49 Filed 09/22/2006 Page 2 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 GOOGLE'S MOTION TO DISMISS SAC CASE NO. C 06-2057 JF (RS) TABLE OF CONTENTS Page NOTICE OF MOTION AND MOTION ........................................................................................ 1 MEMORANDUM OF POINTS & AUTHORITIES ...................................................................... 1 INTRODUCTION...........................................................................................................................1 PRODEDURAL HISTORY............................................................................................................1 ARGUMENT .................................................................................................................................. 2 I. GOOGLE IS IMMUNE FROM LIABILITY FOR ITS SEARCH RESULTS AND PAGERANKS ..................................................................................................................... 2 A. B. II. Google's Search Results and PageRanks are Entitled to Full First Amendment Protection............................................................................................2 Google is Immune from Liability for Restricting Access to the KinderStart Website Under the Communications Decency Act.................................................5 THE COURT SHOULD DISMISS KINDERSTART'S SHERMAN ACT CLAIMS WITH PREJUDICE ............................................................................................................ 8 A. B. Attempted Monopolization ..................................................................................... 9 Monopolization ..................................................................................................... 16 III. THE COURT SHOULD DISMISS KINDERSTART'S FREE SPEECH CLAIMS WITH PREJUDICE .......................................................................................................... 18 A. B. Google Is Not a State Actor Under the First Amendment .................................... 18 KinderStart's California Free Speech Claim Also Fails ....................................... 22 IV. THE COURT SHOULD DISMISS KINDERSTART'S DEFAMATION CLAIM WITH PREJUDICE .......................................................................................................... 23 A. B. C. KinderStart Has Failed to Identify a Provably False Statement............................23 KinderStart Fails to Identify Injury from Actionable Defamation........................26 KinderStart Fails to Allege Actual Malice ............................................................ 26 1. 2. 3. Malice........................................................................................................26 The Common Interest Privilege Bars KinderStart's Defamation Claim ......................................................................................................... 27 The Fair Comment Privilege Bars KinderStart's Defamation Claim ....... 28 -i- 2955747_2.DOC Case 5:06-cv-02057-JF Document 49 Filed 09/22/2006 Page 3 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 V. THE COURT SHOULD DISMISS KINDERSTART'S LANHAM ACT CLAIM WITH PREJUDICE .......................................................................................................... 28 A. B. Google's Representations About Search Results .................................................. 29 Google's Assignment of PageRank.......................................................................31 VI. THE COURT SHOULD DISMISS KINDERSTART'S 17200 CLAIM WITH PREJUDICE......................................................................................................................32 A. B. C. KinderStart's Vague AdSense Allegation Fails to State a Claim ......................... 32 KinderStart's Section 17200 Claim Fails Under Proposition 64 .......................... 33 KinderStart Lacks Article III Standing to Bring a Section 17200 Claim..............34 GOOGLE'S MOTION TO DISMISS SAC CASE NO. C 06-2057 JF (RS) -ii- 2955747_2.DOC Case 5:06-cv-02057-JF Document 49 Filed 09/22/2006 Page 4 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES CASES Page(s) AAA Liquors, Inc. v. Joseph E. Seagram & Sons, Inc., 705 F.2d 1203 (10th Cir. 1982)......................................................................................... 15 ARP Pharmacy Servs., Inc. v. Gallagher Bassett Servs., Inc., 138 Cal. App. 4th 1307 (2006)............................................................................................ 5 Action Repair, Inc. v. American Broad. Cos., 776 F.2d 143 (7th Cir. 1985)................................ 26 Agarwal v. Johnson, 25 Cal. 3d 932, 944 (1979).......................................................................... 27 Alaska Airlines, Inc. v. United Airlines, Inc., 948 F.2d 536 (9th Cir. 1991)................................. 17 Albertson's, Inc. v. Young, 107 Cal. App. 4th 106 (2003) ............................................................ 22 Almeida v. Amazon.com, Inc, 456 F.3d 1316 (11th Cir. 2006) ....................................................... 6 America Online, Inc. v. GreatDeals.Net, 49 F. Supp. 2d 851 (E.D. Va. 1999) .................... 6, 7, 10 American Needle & Novelty, Inc. v. Drew Pearson Mktg., Inc., 820 F. Supp. 1072 (N.D. Ill.1993) ................................................................................................................... 26 American Prof'l Testing Serv., Inc. v. Harcourt Brace Jovanovich Legal & Prof'l Publ'ns, Inc., 108 F.3d 1147 (9th Cir. 1997) .................................................................... 12 Atlantic Richfield Co. v. USA Petroleum Co., 495 U.S. 328 (1990) ....................................... 15, 16 Baker v. Los Angeles Herald Examiner, 42 Cal. 3d 254 (1986) ................................................. 3, 4 Barrus v. Sylvania, 55 F.3d 468 (9th Cir. 1995) ..................................................................... 29, 31 Batzel v. Smith, 333 F.3d 1018 (9th Cir. 2003)........................................................................... 5, 6 Bayou Bottling, Inc. v. Dr Pepper Co., 725 F.2d 300 (5th Cir. 1984) .......................................... 11 Big Bear Lodging Ass'n v. Snow Summit, Inc., 182 F.3d 1096 (9th Cir. 1999).............................. 9 Blatty v. N.Y. Times Co., 42 Cal. 3d 1033 (1986) ........................................................................... 3 Blumenthal v. Drudge, 992 F. Supp. 44 (D.C. Cir. 1998)............................................................... 6 Bolger v. Youngs Drug Prods. Corp., 463 U.S. 60 (1983) ........................................................... 32 Bose Corp. v. Consumers Union of U.S., Inc., 466 U.S. 485 (1984) .............................................. 4 Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993) ...................... 15 Brookfield Commc'ns, Inc. v. West Coast Entm't Corp., 174 F.3d 1036 (9th Cir. 1999)........... 3, 4 Brown v. Kelly Broad. Co., 48 Cal. 3d 711 (1989) ................................................................. 27, 28 GOOGLE'S MOTION TO DISMISS SAC CASE NO. C 06-2057 JF (RS) -iii- 2955747_2.DOC Case 5:06-cv-02057-JF Document 49 Filed 09/22/2006 Page 5 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Brunette v. Humane Society of Ventura County, 294 F.3d 1205 (9th Cir. 2002).................... 18, 20 Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 (1977)............................................ 16 Burton v. Wilmington Parking Auth., 365 U.S. 715 (1961) .......................................................... 20 California Computer Prods., Inc. v. IBM, 613 F.2d 727 (9th Cir. 1979)...................................... 11 Carafano v. Metrosplash.Com. Inc., 339 F.3d 1119 (9th Cir. 2003) .............................................. 6 Cel-Tech Commc'ns, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal. 4th 163 (1999) ................... 33 Chip-Mender Inc. v. Sherwin-Williams Co., No. C 05-3465, 2006 WL 13058 (N.D. Cal. Jan. 03, 2006) ....................................................................... 34 Coastal Abstract Serv., Inc. v. First Am. Title Ins. Co., 173 F.3d 725 (9th Cir. 1999)........... 31, 32 Colgan v. Leatherman Tool Group, Inc., 135 Cal. App. 4th 663 (2006) ...................................... 35 Cortez v. Purolator Air Filtration Prods. Co., 23 Cal. 4th 163 (2000) ........................................ 35 Doe v. Texaco, Inc., No. 06-02820, 2006 WL 2053504 (N.D. Cal. Jul. 21, 2006)....................... 34 Ferguson v. Greater Pocatello Chamber of Commerce, Inc., 848 F.2d 976 (9th Cir. 1988)............................................................................................. 13 Forsher v. Bugliosi, 26 Cal. 3d 792 (1980)................................................................................... 26 Fowler v. Curtis Pub. Co., 182 F.2d 377 (D.C. Cir.1950)............................................................ 26 George v. Pacific-CSC Work Furlough, 91 F.3d 1227 (9th Cir. 1996) .................................. 19, 20 Golden Gateway Center v. Golden Gateway Tenants Ass'n, 26 Cal. 4th 1013 (2001) .......... 21, 22 Gonzales v. Google, Inc., 234 F.R.D. 674 (N.D. Cal. 2006)......................................................... 19 Green v. America Online, Inc., 318 F.3d 465 (3d Cir. 2003)...................................................... 6, 7 Green v. Uccelli, 207 Cal. App. 3d 1112 (1989) .......................................................................... 27 Groden v. Random House, Inc., 61 F.3d 1045 (2nd Cir. 1995) .................................................... 31 Haynes v. Alfred A. Knopf, Inc., 8 F.3d 1222 (7th Cir. 1993)......................................................... 4 Hejmadi v. Amfac, Inc., 202 Cal. App. 3d 525 (1988) .................................................................. 23 Hudgens v. NLRB, 424 U.S. 507 (1975) ....................................................................................... 21 Hughes v. Hughes, 122 Cal. App. 4th 931 (2004) .................................................................. 23, 24 Hurley v. Irish-American Gay, Lesbian & Bisexual Group of Boston, 515 U.S. 557 (1995) ........................................................................................................ 4, 5 Institute of Athletic Motivation v. Univ. of Ill., 114 Cal. App. 3d 1 (1980) .................................. 28 GOOGLE'S MOTION TO DISMISS SAC CASE NO. C 06-2057 JF (RS) -iv- 2955747_2.DOC Case 5:06-cv-02057-JF Document 49 Filed 09/22/2006 Page 6 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Intergraph Corp. v. Intel Corp., 195 F.3d 1346 (Fed. Cir. 1999) ................................................. 13 Jack Russell Terrier Network of N. Cal. v. American Kennel Club, Inc., 407 F.3d 1027 (9th Cir. 2005)........................................................................................... 29 Jackson v. Metropolitan Edison Co., 419 U.S. 345 (1974)..................................................... 18, 19 Jefferson County Sch. Dist. v. Moody's Inv. Servs., Inc., 175 F.3d 848 (10th Cir. 1999)....................................................................................... 3, 17 Kasky v. Nike, Inc., 27 Cal. 4th 939 (2002)................................................................................... 32 Kirtley v. Rainey, 326 F.3d 1088 (9th Cir. 2003).................................................................... 18, 19 Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134 (2003)........................................ 35 Laster v. T-Mobile USA, Inc., 407 F. Supp. 2d 1181 (S.D. Cal. 2005)......................................... 34 Lee v. Katz, 276 F.3d 550 (9th Cir. 2002) ............................................................................... 19, 21 Locke v. Mitchell, 7 Cal. 2d 599 (1936) ........................................................................................ 27 Lowe v. S.E.C., 472 U.S. 181 (1985)............................................................................................... 4 Lundquist v. Reusser, 7 Cal. 4th 1193 (1994) ............................................................................... 27 Maidman v. Jewish Publ'ns, Inc., 54 Cal. 2d 643 (1960) ............................................................. 28 Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986).................................... 14 MetroNet Serv. Corp. v. Qwest Corp., 383 F.3d 1124 (9th Cir. 2004) ......................................... 11 Miami Herald Pub. Co. v. Tornillo, 418 U.S. 241 (1974) .............................................................. 5 Monahan's Marine, Inc. v. Boston Whaler, Inc., 866 F.2d 525 (1st Cir. 1989) ........................... 15 Morningstar, Inc. v. Superior Court, 23 Cal. App. 4th 676 (1994) .............................................. 24 Moyer v. Amador Valley Joint Union High Sch. Dist., 225 Cal. App. 3d 720 (1990) .................... 3 Newcal Indus., Inc. v. Ikon Office Solutions, Inc., No. C04-2776, 2004 WL 3017002 (N.D. Cal. Dec. 23, 2004) .................................................................... 9 New.Net, Inc. v. Lavasoft, 356 F. Supp. 2d 1090 (C.D. Cal. 2004) ............................................. 32 Nike, Inc. v. Kasky, 539 U.S. 654 (2003) ...................................................................................... 34 Novak v. Overture Servs., Inc., 309 F. Supp. 2d 446 (E.D.N.Y. 2004) .......................................... 6 Olympia Equip. Leasing Co. v. Western Union Tel. Co., 797 F.2d 370 (7th Cir. 1986)............................................................................................. 13 Oxycal Labs., Inc. v. Jeffers, 909 F. Supp. 719 (C.D. Cal. 1995) ................................................. 32 GOOGLE'S MOTION TO DISMISS SAC CASE NO. C 06-2057 JF (RS) -v- 2955747_2.DOC Case 5:06-cv-02057-JF Document 49 Filed 09/22/2006 Page 7 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Paradise Hills Assocs. v. Procel, 235 Cal. App. 3d 1528 (1991) ................................................. 17 Parker v. Google Inc., 422 F. Supp. 2d 492 (E.D. Pa. 2006).......................................................... 6 Partington v. Bugliosi, 56 F.3d 1147 (9th Cir. 1995) ..................................................................... 4 Pavlovsky v. Board of Trade, 171 Cal. App. 2d 110 (1959) ......................................................... 28 Pfizer Inc. v. Superior Court, 141 Cal. App. 4th 290 (2006)........................................................ 34 Pool Water Prods. v. Olin Corp., 258 F.3d 1024 (9th Cir. 2001)................................................. 16 Price v. State of Hawaii, 939 F. 2d 702 (9th Cir. 1991) ............................................................... 18 Queen City Pizza, Inc. v. Domino's Pizza, Inc., 124 F.3d 430 (3d Cir. 1997)................................ 9 Rice v. Fox Broad. Co., 330 F.3d 1170 (9th Cir. 2003) .......................................................... 30, 32 Ringler Assocs., Inc. v. Maryland Cas. Co., 80 Cal. App. 4th 1165 (2000) ................................. 24 Robins v. Pruneyard Shopping Center, 23 Cal. 3d 899 (1979), aff'd, 447 U.S. 74 (1980)............................................................................................. 22, 23 Rodas v. Spiegel, 87 Cal. App. 4th 513 (2001) ............................................................................. 28 Rutman Wine Co. v. E&J Gallo Winery, 829 F.2d 729 (9th Cir. 1987)........................................ 16 SCFC ILC, Inc. v. Visa USA, Inc., 36 F.3d 958 (10th Cir. 1994) ................................................. 14 Sanderson v. Culligan Int'l Co., 415 F.3d 620 (7th Cir. 2005)..................................................... 11 Schachar v. American Academy of Ophthalmology, Inc., 870 F.2d 397 (7th Cir. 1989)............................................................................................. 12 Search King Inc. v. Google Tech., Inc., No. 02-1457, 2003 WL 21464568 (W.D. Okla. May 27, 2003) ........................................................... 3, 4 Sever v. Alaska Pulp Corp., 978 F.2d 1529 (1992)....................................................................... 20 Sicor Ltd. v. Cetus Corp., 51 F.3d 848 (9th Cir. 1994)................................................................... 6 Soap Opera Now, Inc. v. Network Publ'g Corp., 737 F. Supp. 1338 (S.D.N.Y. 1990) ............................................................................ 13, 15 Tanaka v. Univ. of S. Cal., 252 F.3d 1059 (9th Cir. 2001) ............................................................. 9 Trader Joe's Co. v. Progressive Campaigns, Inc., 73 Cal. App. 4th 425 (1999) ................... 22, 23 Tschirky v. Superior Court, 124 Cal. App. 3d 534 (1981) ............................................................ 27 United States v. American Library Ass'n, Inc., 539 U.S. 194 (2003) ........................................... 23 United States v. McKeon, 738 F.2d 26 (2d Cir. 1984) .................................................................... 7 United States v. Microsoft Corp., 253 F.3d 34 (D.C. Cir. 2001) .................................................. 10 GOOGLE'S MOTION TO DISMISS SAC CASE NO. C 06-2057 JF (RS) -vi- 2955747_2.DOC Case 5:06-cv-02057-JF Document 49 Filed 09/22/2006 Page 8 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 United States v. Visa USA, 344 F.3d 229 (2d Cir. 2003) .............................................................. 16 Utah Gospel Mission v. Salt Lake City Corp., 425 F.3d 1249 (10th Cir. 2005) ........................... 21 Valdiviezo v. Phelps Dodge Hidalgo Smelter, Inc., 995 F. Supp. 1060 (D. Ariz. 1997)...................................................................................... 7 Venetian Casino Resort, LLC v. Local Joint Executive Bd., 257 F.3d 937 (9th Cir. 2001)............................................................................................. 21 Verizon Commc'ns, Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004) ........................................................................................ 11, 14, 15, 17 Vermont Agency of Natural Res. v. U.S. ex rel. Stevens, 529 U.S. 765 (2000)............................. 34 Vincent v. Trend Western Tech. Corp., 828 F.2d 563 (9th Cir. 1987) .......................................... 20 Whitmore v. Arkansas, 495 U.S. 149 (1990)................................................................................. 34 Wojnarowicz v. American Family Ass'n, 745 F. Supp. 130 (S.D.N.Y. 1990) .............................. 32 Zoslaw v. MCA Distrib. Corp., 693 F.2d 870 (9th Cir. 1982) ...................................................... 15 STATUTES 15 U.S.C. 1125(a)(1)(B).............................................................................................................. 31 47 U.S.C. 230 et seq................................................................................................................. 5, 6 Cal. Bus. & Prof. Code 17204.................................................................................................... 34 Cal. Civ. Code 45a ..................................................................................................................... 26 Cal. Civ. Code 47(c)................................................................................................................... 27 Cal. Civ. Code 48a ..................................................................................................................... 26 RULES Fed. R. Civ. P. 9(g).................................................................................................................. 26, 27 MISCELLANEOUS Eric Goldman, Search Engine Bias and the Demise of Search Engine Utopianism, 8 Yale J.L. & Tech. 188 (Spring 2006) ............................................................................. 25 Erwin Chemerinsky, Constititional Law: Principles and Policies (2d ed. 2002)......................... 21 Splog, How to Stop a New Menace on the Internet, 19 Harv. J.L. & Tech., No. 2 (Spring 2006)........................................................................ 7 GOOGLE'S MOTION TO DISMISS SAC CASE NO. C 06-2057 JF (RS) -vii- 2955747_2.DOC Case 5:06-cv-02057-JF Document 49 Filed 09/22/2006 Page 9 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NOTICE OF MOTION AND MOTION PLEASE TAKE NOTICE that on October 27, 2006 at 9:00 a.m., or as soon thereafter as counsel may be heard by the above-entitled Court, located at 280 South First Street, Courtroom 3, 5th Floor, San Jose, California, 95113, in the courtroom of the Honorable Jeremy Fogel, defendant Google Inc. ("Google") will and hereby does move the Court, pursuant to Rule 12(b)(6) and Rule 12(b)(1) of the Federal Rules of Civil Procedure, for an order dismissing the Second Amended Complaint of Kinderstart.com LLC ("KinderStart") in its entirety. This motion is based on this Notice of Motion and Motion, the Memorandum of Points and Authorities filed herewith, the Declaration of Bart E. Volkmer ("Volkmer Decl."), the accompanying Request for Judicial Notice and the materials referenced therein, the pleadings and papers on file in the action, and upon such other matters as may be presented to the Court at the time of the hearing. MEMORANDUM OF POINTS & AUTHORITIES INTRODUCTION On July 13, 2006, this Court entered a detailed 23-page order dismissing KinderStart's extensive First Amended Complaint ("FAC") in its entirety. The Court found each of the FAC's many counts legally deficient, often on multiple grounds. The Court, however, granted KinderStart leave to replead providing KinderStart an opportunity to correct the FAC's numerous flaws. The Second Amended Complaint ("SAC"), however, does no such thing. Instead, KinderStart has filed an astonishingly prolix 62-page SAC, containing 282 paragraphs of largely incomprehensible allegations, that does not even attempt to cure the legal deficiencies this Court had found. Adding length, confusion, as well as an entirely new (and untenable) claim does nothing to support KinderStart's case. But that is all the SAC does. The SAC should be dismissed this time with prejudice. PROCEDURAL HISTORY KinderStart filed its original complaint, containing seven claims for relief and spanning 116 paragraphs, on March 17, 2006, but never served it. After nearly a month, KinderStart filed and served the nine-claim, 175 paragraph FAC on April 12, 2006. Google moved to dismiss the FAC for failure to state a claim, and filed a special motion to strike several of the claims pursuant GOOGLE'S MOTION TO DISMISS SAC CASE NO. C 06-2057 JF (RS) -1- 2955747_2.DOC Case 5:06-cv-02057-JF Document 49 Filed 09/22/2006 Page 10 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 to California's anti-SLAPP statute. In an Order dated July 13, 2006, the Court granted Google's motion to dismiss with leave to amend, and deferred ruling on Google's motion to strike. Six weeks later, KinderStart filed its bloated SAC. KinderStart continues to style the case as a putative class action brought on behalf of various classes and subclasses of website operators who wish to have the Court instruct Google on whether and how to recommend their sites in Google search results and to have the Court determine the PageRank rating that Google should assign to their sites. Id. 187-195. ARGUMENT I. GOOGLE IS IMMUNE FROM LIABILITY FOR ITS SEARCH RESULTS AND PAGERANKS While buried in the morass of KinderStart's SAC, the heart of this case remains KinderStart's unhappiness with Google's search results and PageRanks. At bottom, KinderStart continues to believe it is entitled to override Google's decision to exclude KinderStart's site from its search results, and its choice to assign KinderStart's site a rating of "PageRank 0" ("0-PR"). KinderStart's specific claims for relief suffer from numerous substantive flaws discussed below. But to the extent KinderStart attacks Google's editorial decisions themselves, KinderStart cannot state a claim no matter what theory it advances because Google is shielded from all liability both by the First Amendment and by 47 U.S.C 230(c)(2), a federal statutory immunity granted to online service providers. A. Google's Search Results and PageRanks are Entitled to Full First Amendment Protection Central to KinderStart's action is the premise that what Google says about the KinderStart site has great significance. Nevertheless, KinderStart unabashedly claims the right to force Google to say things about KinderStart's site that KinderStart would like Google to say, and to prevent Google from saying things that KinderStart does not like. To the extent the action rests on what Google is saying or not saying in its search results and PageRanks themselves, however, Google's free speech rights function as an absolute bar. GOOGLE'S MOTION TO DISMISS SAC CASE NO. C 06-2057 JF (RS) -2- 2955747_2.DOC Case 5:06-cv-02057-JF Document 49 Filed 09/22/2006 Page 11 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 When a user submits a query to Google's search engine, Google responds with search results that are the equivalent of a suggested reading list. 1 Google's search results express Google's views on what websites Google believes are most likely to be of interest to users for a particular topic. SAC 123, 125. Similarly, Google's PageRanks provide users with Google's view of the "importance" of websites. FAC 56 (PageRank provides a "relative measure of the appeal, popularity and relevance of a web site."). They are, in KinderStart's own words, Google's "ratings" for websites. SAC 46 ("PageRank ... is now the de facto and prevailing standard for rating Websites throughout the United States."). Recommendations and ratings such as Google's are plainly opinions, entitled to the protections of both the First Amendment and the California Constitution. Baker v. Los Angeles Herald Examiner, 42 Cal. 3d 254, 268 (1986) (dismissing action against newspaper for allegedly defamatory statements in newspaper's review of television show because statements and review as a whole constitute constitutionally-protected expressions of opinion); Blatty v. N.Y. Times Co., 42 Cal. 3d 1033, 1048 (1986) (holding that a newspaper cannot be held liable for failing to include a book on its "Best Sellers" list because the paper's speech in choosing whom to include on the list is absolutely protected by the First Amendment); Moyer v. Amador Valley Joint Union High Sch. Dist., 225 Cal. App. 3d 720, 724-26 (1990) (dismissing various claims arising from newspaper article labeling plaintiff as "the worst teacher" at the school based on free speech protections afforded to the opinion); Jefferson County Sch. Dist. v. Moody's Inv. Servs., Inc., 175 F.3d 848 (10th Cir. 1999) (dismissing claims based on defendant's rating of plaintiff's bonds in light of free speech protections afforded to the rating); Search King Inc. v. Google Tech., Inc., No. 02-1457, 2003 WL 21464568, at *4 (W.D. Okla. May 27, 2003) (dismissing claim based on Google's search results and PageRanks in light of Google's free speech rights because Google's opinions The Ninth Circuit generally has described a search engine as follows: "When a keyword is entered, the search engine processes it through a self-created index of web sites to generate a (sometimes long) list relating to the entered keyword. Each search engine uses its own algorithm to arrange indexed materials in sequence, so the list of web sites that any particular set of keywords will bring up may differ depending on the search engine used." Brookfield Commc'ns, Inc. v. West Coast Entm't Corp., 174 F.3d 1036, 1045 (9th Cir. 1999). GOOGLE'S MOTION TO DISMISS SAC CASE NO. C 06-2057 JF (RS) 1 -3- 2955747_2.DOC Case 5:06-cv-02057-JF Document 49 Filed 09/22/2006 Page 12 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 are "entitled to `full constitutional protection.'"). As the California Supreme Court explained in Baker: The point of any review whether it be of a book, a movie, a play, a television program, or some other event is to convey the reviewer's opinion and professional evaluation of the thing being reviewed. People read reviews expressly to find out the reviewer's opinion. Readers use that opinion to help them decide whether it is worth spending their time and/or money to attend a particular event, go to a particular place or read a particular book. Baker, 42 Cal. 3d at 268. Google's search results and PageRanks are no different. Millions of people rely on Google for Google's opinions about the relevance and importance of websites. As KinderStart itself explains, other search engines express different views about which sites will be of interest to users on a particular topic. See SAC 34, 42 (noting Microsoft and Yahoo rank sites differently than Google does); See also Brookfield, 174 F.3d at 1045 (explaining how different search engines yield different results); Search King, 2003 WL 21464568, at **4-5. ("PageRanks are opinions" and "do not contain provably false connotations. ... Other search engines express different opinions, as each search engine's method of determining relative significance is unique."). KinderStart also expressly acknowledges that PageRanks are opinions containing at least some subjective elements. SAC 7 (a "PageRank ... it is a figure not simply reflecting an opinion of a solely subjective value of a Website by Google, but an opinion based upon a rigorous, objective calculation . ...") (emphasis added). These opinions are absolutely protected under the First Amendment, and KinderStart cannot impose liability upon Google for expressing them. Lowe v. S.E.C., 472 U.S. 181, 210 n.58 (1985) ("we have squarely held that the expression of opinion about a commercial product ... is protected by the First Amendment"), citing Bose Corp. v. Consumers Union of U.S., Inc., 466 U.S. 485, 513 (1984); Partington v. Bugliosi, 56 F.3d 1147, 1156 (9th Cir. 1995) ("if it is plain that the speaker is expressing a subjective view, an interpretation, a theory, conjecture, or surmise, rather than claiming to be in possession of objectively verifiable facts, the statement is not actionable."), quoting Haynes v. Alfred A. Knopf, Inc., 8 F.3d 1222, 1227 (7th Cir. 1993). For the same reason, KinderStart cannot force Google to include the KinderStart site in Google's search results or to assign it a particular PageRank. See Hurley v. Irish-American Gay, Lesbian & Bisexual Group of Boston, 515 U.S. 557 (1995) (requiring defendants to alter the expressive 2955747_2.DOC GOOGLE'S MOTION TO DISMISS SAC CASE NO. C 06-2057 JF (RS) -4- Case 5:06-cv-02057-JF Document 49 Filed 09/22/2006 Page 13 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 content of their parade violated the First Amendment); Miami Herald Pub. Co. v. Tornillo, 418 U.S. 241, 258 (1974) (striking down a law that required newspapers to conspicuously publish replies to attacks on an election candidate's character); ARP Pharmacy Servs., Inc. v. Gallagher Bassett Servs., Inc., 138 Cal. App. 4th 1307, 1314 (2006) (statute requiring prescription drug claims processors to submit drug processing costs to their clients was unconstitutional because it improperly compelled speech; "[t]he prohibition against compelled speech encompasses compelled access, where a speaker is required to disseminate the speech of another, even if not required to endorse the content."). Thus, in considering KinderStart's claims, the Court should reject any effort to impose liability on Google, whether directly or indirectly, for removing KinderStart's website from its search results or for assigning it a 0-PR. B. Google is Immune from Liability for Restricting Access to the KinderStart Website Under the Communications Decency Act KinderStart's refrain in this case has been that by excluding KinderStart's site from Google's search results, and by assigning the site a 0-PR, Google has engaged in "Blockage" and censorship. See, e.g., SAC 11. But any such claims against an interactive computer service like Google are barred as a matter of federal law. Section 230 of the Communications Decency Act ("CDA"), entitled "Protection for private blocking and screening of offensive material," states in relevant part: No provider ... of an interactive computer service shall be held liable on account of ... any action taken in good faith to restrict access to or availability of material that the provider or user considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing or otherwise objectionable, whether or not such material is constitutionally protected. 47 U.S.C. 230(c)(2)(A). Congress enacted this protection to encourage service providers to exercise control over the material presented to its users. See 47 U.S.C. 230(b)(1) & (4) (reciting Congress's intention to encourage to "promote the continued development of the Internet and other interactive computer services" and "the development and utilization of blocking and filtering technologies"). As the Ninth Circuit has explained, the protections of Section 230 were intended to be broad, "protecting service providers and users from liability for claims arising out of the removal of potentially `objectionable' material from their services." Batzel v. Smith, 333 GOOGLE'S MOTION TO DISMISS SAC CASE NO. C 06-2057 JF (RS) -5- 2955747_2.DOC Case 5:06-cv-02057-JF Document 49 Filed 09/22/2006 Page 14 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 F.3d 1018, 1030 n.14 (9th Cir. 2003); Almeida v. Amazon.com, Inc, 456 F.3d 1316, 1321 n.3 (11th Cir. 2006) ("The language of section 230(c)(2) is clearly inconsistent with state law that makes interactive service providers liable based on their efforts to screen content."). And in accordance with the plain language of the statute, courts have deferred to service providers' determinations as to what is "objectionable" content, applying Section 230(c)(2), for example, to shield a provider from liability for restricting access to email that the provider determined was undesirable "spam." See Green v. America Online, Inc., 318 F.3d 465, 473 (3d Cir. 2003) (relying on 230(c)(2) to find AOL immune from false advertising claim for restricting user access to email that AOL considered objectionable "spam"); America Online, Inc. v. GreatDeals.Net, 49 F. Supp. 2d 851, 864 (E.D. Va. 1999) (relying on 230(c)(2) to find that "blockage" of spam is "encouraged by federal law" and thus not wrongful); see also Blumenthal v. Drudge, 992 F. Supp. 44, 52 n.13 (D.C. Cir. 1998) (explaining that while 230(c)(2) "primarily addresses obscenity and violent material, it also references material that is `otherwise objectionable,' a broad enough category to cover defamatory statements as well."). There can be no doubt that Google is an interactive computer service under Section 230(c)(2). 2 It is equally clear, given KinderStart's own allegations, that Google's actions regarding the KinderStart website fall squarely within the protections of Section 230(c)(2)(A). With respect to Google's removal of KinderStart's site from its search results, KinderStart has already alleged that Google's "Blockage" is "presumably based on either stated or unstated `quality guidelines.'" Original Complaint 23 ("Compl."). 3 The guidelines, as KinderStart "Interactive computer service" is defined broadly as "any information service, system or access software provider that provides or enables computer access to by multiple users to a computer server . ..." 47 U.S.C. 230(f)(2). Courts have uniformly held that search engines like Google are interactive computer services. See, e.g., Parker v. Google Inc., 422 F. Supp. 2d 492 (E.D. Pa. 2006) ("there is no doubt that Google qualifies as an `interactive computer service'" and is subject to the protections of 47 U.S.C. 230); Novak v. Overture Servs., Inc., 309 F. Supp. 2d 446, 452-53 (E.D.N.Y. 2004) (same); see also Carafano v. Metrosplash.Com. Inc., 339 F.3d 1119 (9th Cir. 2003) (online matchmaking service held to be interactive service provider under Section 230(c)). The allegations of KinderStart's Original Complaint and FAC are judicial admissions. Sicor Ltd. v. Cetus Corp., 51 F.3d 848, 859 (9th Cir. 1994). That these allegations were dropped from the SAC makes them no less binding, as KinderStart has not asserted that its prior allegations were false or a justifiable mistake, or provided some other explanation for why it (continued...) GOOGLE'S MOTION TO DISMISS SAC CASE NO. C 06-2057 JF (RS) 3 2 -6- 2955747_2.DOC Case 5:06-cv-02057-JF Document 49 Filed 09/22/2006 Page 15 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 alleges, state that Google will block sites containing content that appears aimed at creating artificially inflated search results for sites by gaming Google's processes. FAC 44-45. That is, KinderStart itself has pled that Google's "Blockage" is based on its determination that sites contain content that Google finds objectionable (and that its users will find objectionable) because it will lead users of the search engine to sites of no interest to them. 4 Indeed, that is what KinderStart claims happened in its case. See KinderStart's Motion for Preliminary Injunction at 11 ("Defendant Google incredulously determined that KS.com was no longer `relevant' on the Internet and removed it from Google's index."). 5 Just as AOL had immunity under Section 230(c)(2) in the Green and Great Deals cases for blocking what it thought to be spam, so too is Google immune under all of KinderStart's claims for restricting access to what Google determines to be "web spam." See FAC 64 (equating "Blockage" with "anti-Webspamming"); SAC 228. 6 KinderStart likewise supplies the allegations necessary to establish the application of Section 230(c)(2) to Google's assignment of 0-PR to the KinderStart site. According to KinderStart, Google's purpose in assigning 0-PRs to websites is to "punish Websites for carrying (...continued from previous page) should not be bound by them. Valdiviezo v. Phelps Dodge Hidalgo Smelter, Inc., 995 F. Supp. 1060, 1065-66 & n.6 (D. Ariz. 1997); United States v. McKeon, 738 F.2d 26, 31 (2d Cir. 1984) ("A party ... cannot advance one version of the facts in its pleadings, conclude that its interests would be better served by a different version, and amend its pleadings to incorporate that version, safe in the belief that the trier of fact will never learn of the change in stories."). For a detailed discussion of this issue, known as "web spamming," and the harm to both search engines and their users that it causes, see Splog, How to Stop a New Menace on the Internet, 19 Harv. J.L. & Tech., No. 2 at 479 (Spring 2006) at 479 (describing "link spam" deceptive tactic of manufacturing artificial links to fool users and search engines as disrupting user attempts to search for information of relevance). As KinderStart concedes, Google fully discloses this important practice of ensuring its search results remain relevant to users. SAC 153. Google clearly states on its site that a page may be "manually removed from our index if it [does not] conform with the quality standards necessary to assign accurate PageRank." Id. It goes on to explain that its quality standards deem content objectionable if it appears intended "for the purposes of fooling search engines." Id. See also SAC 87 (Google represents that removal of sites and content from its index is done to address "spamming" the index). Google's practice of policing sites containing objectionable content is hardly a secret to KinderStart or anyone else. KinderStart leaves no doubt that Google believes its actions are authorized and proper. See FAC at 46-48 ("It is the belief and practice maintained by Defendant Google that ... it is entitled at any time, for any reason or no reason at all, to block or remove referrals, listings and indexing of any Website on the Internet.") (emphasis added). GOOGLE'S MOTION TO DISMISS SAC CASE NO. C 06-2057 JF (RS) 6 5 4 -7- 2955747_2.DOC Case 5:06-cv-02057-JF Document 49 Filed 09/22/2006 Page 16 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 content of questionable or irrelevant quality in Google's absolute and internal discretion (`Inferior Page Quality' (`IPQ'))." SAC 144. KinderStart further alleges that Google "executes the operation of a software filter to programmatically punish a Website with a 0-PR [that] [Google] believes to have IPQ." SAC 145. Thus, KinderStart itself pleads that Google's assignment of a 0-PR is designed to "punish" websites that carry inferior content that Google determines is objectionable. Further, according to KinderStart, this "punishment" functions as a blacklist, causing "hundreds perhaps thousands of other Websites to immediately terminate links to the penalized site" thereby decreasing user visits to the site. SAC 146 ("The adverse effect is both immediate and viral to an entire network of Websites on the Internet."); SAC 281 (Because of the 0-PR Google assigns to KS.com and others "prospective ... viewers of such deranked sites ... refrain from ... visiting ... such sites"). Under KinderStart's own allegations, therefore, in assigning a 0-PR, Google has taken action to restrict access to material that it determines to be objectionable. Under Section 230(c), KinderStart's claims predicated on that conduct, which appear to be all of the claims in the SAC, fail as a matter of law. II. THE COURT SHOULD DISMISS KINDERSTART'S SHERMAN ACT CLAIMS WITH PREJUDICE Kinderstart's FAC asserted claims against Google for attempted monopolization and monopolization under Section 2 of the Sherman Act. The essence of both claims was the same. It was that Google's alleged "Blockage" of the KinderStart.com website and its claimed "devaluation" of the PageRank assigned to that website constituted exclusionary conduct, allowing Google to monopolize or to attempt to monopolize markets the FAC defined as the "Search Engine Market," the "Search Ad Market," and the "Website Rating Market." FAC 112-35, 145-53. This Court dismissed both of KinderStart's antitrust claims, finding the allegations wholly inadequate on multiple grounds. Order at 11-15, 17-18. KinderStart's SAC addresses none of the multiple deficiencies identified in the Court's opinion. The antitrust claims should therefore be dismissed with prejudice. GOOGLE'S MOTION TO DISMISS SAC CASE NO. C 06-2057 JF (RS) -8- 2955747_2.DOC Case 5:06-cv-02057-JF Document 49 Filed 09/22/2006 Page 17 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A. Attempted Monopolization As the Court explained in its opinion, to maintain a claim for attempted monopolization under Section 2 of the Sherman Act, a plaintiff must among other things allege sufficiently the following essential elements: (1) an appropriate definition of the relevant market, Order at 11-12 & n.2; (2) anticompetitive or exclusionary conduct, id. at 11-12; and (3) causal antitrust injury, id.; see also Hearing Trans., June 30, 2006, at 5. The SAC fails to satisfy any of these requirements. 1. Market definition. The Court's opinion explained that KinderStart's FAC did "not sufficiently describ[e] the markets relevant to its claim." Order at 12 n.2. In particular, the Court said, it was "unclear how the Search Engine Market ... is separable from the Search Ad Market . ..." Id. The SAC does not cure these defects. Although the SAC's description of the purported markets is a good deal more verbose than that in the FAC, compare SAC 34-39 with FAC 113-14, it does not even attempt to describe how the two purported markets might be severable from one another. This failure to articulate any distinction between the purported market is important because KinderStart does not allege that either it or Google derives any revenues from Internet searches. Rather, the only money to be made and the only market in which KinderStart asserts any injury is the advertising market. In connection with that purported "Search Ad Market," however, KinderStart provides no facts whatsoever to suggest that it is a relevant product market for antitrust purposes. To allege a relevant market sufficient to withstand dismissal under Rule 12(b)(6), an antitrust plaintiff is required to set forth facts that, if proven, would establish that the product market alleged is not interchangeable with reasonable substitutes; "conclusory assertion[s] ... [are] insufficient." Tanaka v. Univ. of S. Cal., 252 F.3d 1059, 1063-64 (9th Cir. 2001); Big Bear Lodging Ass'n v. Snow Summit, Inc., 182 F.3d 1096, 1105 (9th Cir. 1999); Queen City Pizza, Inc. v. Domino's Pizza, Inc., 124 F.3d 430, 438 (3d Cir. 1997); Newcal Indus., Inc. v. Ikon Office Solutions, Inc., No. C04-2776, 2004 WL 3017002, at **3-5 (N.D. Cal. Dec. 23, 2004). In this case, KinderStart has alleged no facts whatsoever to suggest that other forms of advertising are not reasonably interchangeable with search engine advertising. There is nothing in the SAC that even attempts to explain why advertising on websites other than search engines or, GOOGLE'S MOTION TO DISMISS SAC CASE NO. C 06-2057 JF (RS) -9- 2955747_2.DOC Case 5:06-cv-02057-JF Document 49 Filed 09/22/2006 Page 18 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 for that matter, e-mail, direct mail, advertising in magazines, newspapers, radio stations, television, billboards, or public transportation vehicles is not a commercially acceptable manner of reaching potential customers. In GreatDeals.net, 49 F. Supp. 2d 851, similar antitrust claims were dismissed under Rule 12(b)(6) on precisely this basis. The defendant there asserted that AOL was monopolizing an "email advertising" market and a "distinct sub-market based on the Internet subscribers who are accessed through AOL facilities." Id. at 857. The court held that it "must reject [GreatDeal's] proposed market." Id. at 858. Specifically, "the Court rejects [the] attempt to restrict the market to e-mail advertising. ...There are numerous substitutes for e-mail advertising, some of which are less expensive, including use of the World Wide Web, direct mail, billboards, television, newspapers, radio, and leaflets, to name a few." Id. Just as GreatDeal's allegations had to be dismissed for failure to articulate why these alternatives were not reasonably interchangeable, KinderStart's identical failure warrants dismissal here. 2. Exclusionary conduct. The central failure of KinderStart's FAC antitrust claims, and the focus of most of this Court's analysis, was on the failure to plead facts sufficient to suggest that Google has engaged in any conduct deemed exclusionary under Section 2. The SAC repeats (with greater length) the FAC allegations concerning PageRank and Blockage; expands upon the FAC's assertions of "false representations" and the use of AdSense; and adds a new set of allegations concerning Google's pricing practices. Each set of allegations is addressed below. None, whether considered singly or in the aggregate, suffices as a sufficient allegation of exclusionary conduct under applicable law. See United States v. Microsoft Corp., 253 F.3d 34, 78 (D.C. Cir. 2001) (liability cannot be based on the aggregate effect of a series of acts which "are not in themselves unlawful" or exclusionary). a. PageRank and Blockage. This Court has previously considered, and rejected, KinderStart's allegations that the claimed PageRank devaluation and "Blockage" of its website constitute exclusionary conduct. As the Court explained: "KinderStart's allegations that Google removed KinderStart from search results and lowered its PageRank do not suffice to allege predatory conduct as opposed to legitimate competitive actions. `[A]s a general matter GOOGLE'S MOTION TO DISMISS SAC CASE NO. C 06-2057 JF (RS) -10- 2955747_2.DOC Case 5:06-cv-02057-JF Document 49 Filed 09/22/2006 Page 19 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 "there is no duty to aid competitors."' MetroNet Serv. Corp. v. Qwest Corp., 383 F.3d 1124, 1131 (9th Cir. 2004)." Order at 12. Accord, e.g., Verizon Commc'ns, Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 407-10 (2004); California Computer Prods., Inc. v. IBM, 613 F.2d 727, 744 (9th Cir. 1979) ("IBM, assuming it was a monopolist, had the right to redesign its products to make them more attractive to buyers whether by reason of lower manufacturing cost and price or improved performance. It was under no duty to help CalComp or other peripheral equipment manufacturers survive or expand. IBM need not have ... constricted its product development so as to facilitate sales of rival products. The reasonableness of IBM's conduct in this regard did not present a jury issue."); Bayou Bottling, Inc. v. Dr Pepper Co., 725 F.2d 300, 304-05 (5th Cir. 1984) (monopolist soft drink bottler had no obligation to allow rival bottlers space in its coolers or vending machines). KinderStart's SAC adds length, but nothing new of substance, to its prior allegations. b. Alleged "False Statements." The SAC adds a number of new albeit baseless allegations about "false" statements. SAC 59, 61. In brief, these allegations claim that Google represents that its search results are objective and not subject to the exercise of judgment; that these representations are false; and therefore that the lowered KinderStart.com PageRank and omission from Google search results are disparaging and, in some unstated manner, harmful to competition. The allegations, however, suffer from a number of fatal flaws. First, as the Seventh Circuit recently explained, even where a monopolist's statements about its rivals' products really are material, false, and disparaging, those statements are not anticompetitive or predatory. On the contrary, "[a]ntitrust law condemns practices that drive up prices by curtailing output. False statements about a rival's goods do not curtail output in either the short or long run. They just set the stage for competition in a different venue: the advertising market." Sanderson v. Culligan Int'l Co., 415 F.3d 620, 623 (7th Cir. 2005) (citations omitted). The court added: "Warfare among suppliers and their different products is competition. Antitrust law does not compel your competitor to praise your product or sponsor your work. To require cooperation or friendliness among rivals is to undercut the intellectual foundations of antitrust GOOGLE'S MOTION TO DISMISS SAC CASE NO. C 06-2057 JF (RS) -11- 2955747_2.DOC Case 5:06-cv-02057-JF Document 49 Filed 09/22/2006 Page 20 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 law." Id. (quoting Schachar v. American Acad. of Ophthalmology, Inc., 870 F.2d 397, 399 (7th Cir.1989)). Second, even under cases that suggest that disparagement might qualify as exclusionary conduct in some circumstances, the hurdles for alleging a viable claim are necessarily steep: To prove that [a defendant's] false and misleading advertising constituted exclusionary conduct, the disparagement must overcome a presumption that the effect on competition of the fliers was de minimis. ... "[A] plaintiff may overcome de minimis presumption `by cumulative proof that the representations were [1] clearly false, [2] clearly material, [3] clearly likely to induce reasonable reliance, [4] made to buyers without knowledge of the subject matter, [5] continued for prolonged periods, and [6] not readily susceptible of neutralization or other offset by rivals." [The plaintiff] must satisfy all six elements to overcome [this] de minimis presumption. American Prof'l Testing Serv., Inc. v. Harcourt Brace Jovanovich Legal & Prof'l Publ'ns, Inc., 108 F.3d 1147, 1152 (9th Cir. 1997) (citations omitted). KinderStart cannot satisfy these requirements. For starters, the statements on which it relies are not in any way "clearly false" or "clearly likely to induce reasonable reliance." KinderStart itself has conceded that Google makes clear that its search results (and therefore its PageRanks) are subject to adjustments based on its Quality Guidelines and, in fact, that pages may be "manually removed." FAC 44-45. KinderStart acknowledges that Google has made clear that it does not "comment on the individual reason a page was removed" and does not "offer an exhaustive list of practices that can cause removal," but that Google recommends in any event that websites "avoid `doorway' pages created just for search engines ... with little or no original content" and avoid creating "domains with substantially duplicate content" (id.) features that one necessarily encounters when browsing KinderStart.com. Third, KinderStart has failed to address any of the reasons given previously by this Court for dismissing the prior "false misrepresentations" allegations as legally insufficient. Order at 1314. KinderStart provides no explanation of how manual adjustment of search results whether "falsely concealed" or not could possibly be anticompetitive rather than a process designed to improve the quality of Google's product. If Google is as popular as KinderStart claims, it is beyond dispute that the free market has made a choice to prefer Google searches to those offered by its many competitors. As was explained in a leading case, it is "the free market and not a judge GOOGLE'S MOTION TO DISMISS SAC CASE NO. C 06-2057 JF (RS) -12- 2955747_2.DOC Case 5:06-cv-02057-JF Document 49 Filed 09/22/2006 Page 21 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 or a jury decides whose products are inferior." Olympia Equip. Leasing Co. v. Western Union Tel. Co., 797 F.2d 370, 378 (7th Cir. 1986). Arguments about techniques that make firms successful in satisfying consumers should be fought in the market, not the courts. c. AdSense. This Court dismissed the FAC's allegations about AdSense because the FAC provided no explanation as to how Google was supposed to be "pressuring websites to purchase advertising to avoid decreased PageRank scores, and removal from Results pages," or how such pressure might have harmed KinderStart in an exclusionary way. Order at 13. The SAC does not address these deficiencies. In paragraph 62, the SAC asserts that Google has terminated AdSense contracts of competitors "arbitrarily" and without justification, and that this has caused a reduction in "vital" revenues to these AdSense partners. The most these allegations say is that, if Google terminates an AdSense contract, the terminated advertiser must look elsewhere for advertising revenue. That is not an allegation of exclusionary conduct for at least three reasons. First, KinderStart nowhere explains how a website owner using Google's AdSense to derive advertising revenue might be deemed a competitor of Google's in that respect or, perhaps more importantly, how termination of an AdSense contract would in any way enhance Google's purported market power. A refusal to deal with a non-competitor does not increase the defendant's market share at the expense of its rivals and, therefore, is not actionable. See, e.g., Soap Opera Now, Inc. v. Network Publ'g Corp., 737 F. Supp. 1338, 1342, 1349 (S.D.N.Y. 1990) (refusal to accept plaintiff's ads not unlawful and complaint dismissed; "[e]ven assuming that defendant is a monopolist in its product market, unless plaintiff and defendant are in competition with one another, defendant has no duty to deal with plaintiff"); see also Intergraph Corp. v. Intel Corp., 195 F.3d 1346, 1357 (Fed. Cir. 1999) ("the presence of a competitive relationship is fundamental to invoking the Sherman Act to force access to the property of another"); Ferguson v. Greater Pocatello Chamber of Commerce, Inc., 848 F.2d 976, 983 (9th Cir. 1988) ("[defendant] has not refused to deal with anyone ... [plaintiffs] simply failed to outbid their competitors"). Second, to the extent that Google is alleged to have terminated the AdSense agreements of firms that are, in fact, competitors, the allegation fails equally for the reason given by the Court GOOGLE'S MOTION TO DISMISS SAC CASE NO. C 06-2057 JF (RS) -13- 2955747_2.DOC Case 5:06-cv-02057-JF Document 49 Filed 09/22/2006 Page 22 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 (Order at 12) and summarized above that Google has no duty to help its competitors. It would be a strange form of competition indeed if Google were required to help its competitors grow by allowing them to participate in the AdSense program. If a rival wants to compete against Google in this respect, the remedy is to develop its own alternative advertising program, not to free ride on the efforts that Google has made. See SCFC ILC, Inc. v. Visa USA, Inc., 36 F.3d 958, 969-72 (10th Cir. 1994) (prevention of free riding a legitimate efficiency justification warranting denial of access). Third, the entire set of allegations is irrelevant to this case in any event because there is no allegation that KinderStart's AdSense agreement was ever terminated. Whatever may or may not have occurred with the other websites, the question here is whether KinderStart has a claim for relief. The termination of someone else's agreement gives KinderStart no basis to sue. d. Pricing. The only thing relating to the antitrust claims in the SAC that is truly "new" (as opposed to longer-winded) is the series of allegations about Google's pricing practices. In brief, KinderStart asserts that Google charges high prices for ads, has increased prices, and discriminates among its customers in its pricing. The "discrimination" alleged is based on Google's Landing Page Quality assessments. Specifically, the SAC alleges that sites deemed by Google to have a lower quality scores are subject to "minimum price floors" as well as price increases. SAC 64. These false allegations provide no basis for a claim because, even if assumed true, the conduct alleged is not exclusionary as a matter of law. The Supreme Court specifically held in Trinko, 540 U.S. at 407, that charging high prices is not illegal. As the Court said, "[t]he mere possession of monopoly power, and the concomitant charging of monopoly prices, is not only not unlawful; it is an important element of the freemarket system. The opportunity to charge monopoly prices at least for a short period is what attracts `business acumen' in the first place; it induces risk taking that produces innovation and economic growth." Id. Moreover, rivals have no basis to complain about prices increases by their competitors. As the Supreme Court recognized in Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 595-96 (1986), prices increases do not injure rivals, they operate to their benefit. GOOGLE'S MOTION TO DISMISS SAC CASE NO. C 06-2057 JF (RS) -14- 2955747_2.DOC Case 5:06-cv-02057-JF Document 49 Filed 09/22/2006 Page 23 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 KinderStart's allegations of discriminatory pricing fare no better. The charging of discriminatory prices to customers is not an exclusionary act in the absence of evidence that the prices are "predatory," that is, below an appropriate measure of cost. See, e.g., Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 222 (1993). The charging of low, but nonpredatory, prices is in fact the essence of competition. As the Supreme Court has stated, "[l]ow prices benefit consumers regardless of how those prices are set, and so long as they are above predatory levels, they do not threaten competition." Atlantic Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 340 (1990). Absent allegations of below-cost predatory pricing, therefore, attacks on Google's pricing policies as discriminatory necessarily fail. See Trinko, 540 U.S. at 407-08; Soap Opera Now, 737 F. Supp. at 1349. The decision in Monahan's Marine, Inc. v. Boston Whaler, Inc., 866 F.2d 525 (1st Cir. 1989) (Breyer, J.), is on point. In Monahan's, the plaintiff alleged that defendant Boston Whaler, Inc. sold boats to plaintiff's competitors at prices lower than, and terms better than, it offered to plaintiff. Id. at 526. The court held that "Whaler's actions (which we shall call `price discrimination') are not, on balance, anticompetitive for Sherman Act purposes." Id. at 527. In doing so, the court stated, inter alia, that "the Sherman Act does not normally forbid a seller from charging a low, nonpredatory price, even though that price may make it harder for a competitor to enter, or to remain in, the market." Id. at 528. It also noted that there is "nothing anticompetitive in the simple fact that a seller selectively cuts prices, or offers other favorable terms, to some of its dealers, even though such discrimination harms the non-favored dealers." Id. at 529; accord, e.g., AAA Liquors, Inc. v. Joseph E. Seagram & Sons, Inc., 705 F.2d 1203, 1207 (10th Cir. 1982) ("We do not think section one of the Sherman Act requires the manufacturer to offer the same price to all its customers"); Zoslaw v. MCA Distrib. Corp., 693 F.2d 870, 887 (9th Cir. 1982) ("the price discrimination which results where buyers seek competitive advantage from sellers encourages the aims of the Sherman Act."). e. Lack of Antitrust Injury. The final deficiency articulated by the Court with regard to KinderStart's antitrust claims was the lack of any "nexus" the absence of any facts indicating that the injuries KinderStart alleges have any adverse impact on competition. See GOOGLE'S MOTION TO DISMISS SAC CASE NO. C 06-2057 JF (RS) -15- 2955747_2.DOC Case 5:06-cv-02057-JF Document 49 Filed 09/22/2006 Page 24 of 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Order at 11-12; Hearing Trans., June 30, 2006, at 5. It is an essential element of every antitrust claim that plaintiff allege "antitrust injury" injury that reflects the adverse effect of the challenged conduct on competition. Atlantic Richfield, 495 U.S. at 338-42. An adverse effect on the plaintiff, without a showing of harm to consumers and competition, is never enough. That is because the antitrust laws are for the protection of competition, not individual competitors. Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 488-89 (1977); see, e.g., Pool Water Prods. v. Olin Corp., 258 F.3d 1024, 1036 (9th Cir. 2001) (plaintiff's falling market share fails to show antitrust injury because a "decrease in one competitor's market share ... affects competitors, not competition"). A central flaw underlying KinderStart's complaint is the absence of any allegation suggesting that the harm to KinderStart might equate with harm to the market an increase in market prices, a reduction in market output or quality, or a decline in innovation. Cf. United States v. Visa USA, 344 F.3d 229, 240-41 (2d Cir. 2003). KinderStart does not, and indeed cannot, claim that the devaluation of its PageRank or the "Blockage" of its site will cause any kind of marketwide reduction in total website viewing or Inte

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